Lottery Bond

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What is a lottery bond?

Most states require lottery ticket sellers and businesses operating lottery machines to post a lottery bond. This type of license bond protects customers from unethical and illegal behavior on the lottery retailer’s part. These bonds may go by other names, depending on the state, including:

  • Lottery machine bonds
  • Lotto bonds

A lottery bond ensures bondholders abide by industry laws and regulations and operate ethically and honestly. The bond also guarantees that bondholders pay all applicable state taxes for ticket sales.

Get Your Lottery Bond:

Quick Takeaways

  • Most states require lottery ticket sellers and businesses operating lottery machines to post a lottery bond. 
  • A lottery bond ensures that the bondholder abides by the law and operates their business ethically and honestly. 
  • If the bondholder tampers with ticket sales or lottery equipment, they could face bond claims.

How does a lottery bond work?

A lottery bond is a three-party agreement. It holds the bondholder accountable to the law and protects the state and the public from unethical behaviors and business practices. The three parties involved are the surety, principal, and obligee.

  • Surety: The company that issues the bond
  • Principal: The bonded business or individual selling lottery tickets or operating lottery machinery
  • Obligee: The state lottery commission that requires the principal to post the bond

If the bondholder tampers with ticket sales or lottery equipment or operates illegally or unethically in another way, they could face bond claims. The surety will reimburse the claimant for any money lost because of the lottery retailer. However, the lottery retailer must then pay back the surety for the entire amount paid to settle the claim, plus interest and fees.

Who needs lottery bonds?

If you want to sell lottery tickets or offer lottery equipment to the public, you must post a lotto bond. This goes for individuals and businesses in most states. 

A lottery bond protects the state if your business tampers with equipment or mishandles funds. It also protects the public by holding lottery businesses accountable to state and industry laws and regulations. 

To determine whether you need this bond, call ZipBonds at (888) 435-4191 or contact your State Lottery Commission, State Lottery Agency, or the like.

How much does a lottery bond cost?

Most lottery bond requirements range from around $3,000 to $20,000. You will pay a small percentage of the bond requirement for your state. Your credit score is a significant factor in the rate you’ll pay. Sureties also consider other factors like your financial history and current financial status.

You could pay as little as 1% of the bond with excellent credit. For example, if you need a $10,000 bond, your premium would be $100. If you need a $20,000 bond, you might pay $200.

Frequently Asked Questions

If you have a low credit score, you may still be able to get bonded. Expect to pay a higher premium – upwards of 5-15% of the bond requirement. 

The most common reason for bond claims made by the state is a business’s failure to pay all required taxes. If the state files a claim against your lottery bond, your surety will investigate to see if the claim is valid or not. You can settle a valid claim upfront, or your surety can settle it for you. If you choose the latter option, you must repay your surety for all claim-related costs, plus interest and fees. 

Other reasons for claims against lottery bonds include:

  • Failing to set aside enough funds to cover lottery winnings
  • Failing to be upfront about a machine malfunctioning
  • Breaking another industry law or regulation.

Your bond must remain active for as long as you wish to run your business. You must keep your license and surety bond up to date and renew each before the terms expire. License and bond terms can vary by state.

The licensing process will vary from state to state. Here are some general requirements you will likely need to fulfill to obtain your lottery retailer license.

  • Submit an application form.
  • Post a surety bond.
  • Provide basic information like your name, business name, business address, and social security number.
  • Pay applicable fees.
  • Pass a background check.
  • Provide a liquor permit number (if needed) and store hour information.
  • Fill out a Lottery Electronic Fund Transfer system form (if needed).

How to Apply for Your Lottery Bond

ZipBonds is the fastest and most secure way to get the license and permit bonds and miscellaneous commercial bonds you need. We take out the pain of long, complicated applications. Most of our bonds are approved and processed immediately. Apply today by starting the online application below or calling us at (888) 435-4191.



Founders Ryan Swalve and Zach Mefferd formed the vision for when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”

Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.